5 - E Inland Marine Insurance
Commercial property floater risks
- Can be written on controlled or uncontrolled forms Includes: Bailee forms Equipment Floaters (open or named peril) Business Floaters (open peril) Dealer Policies (open peril)
What are coverages specific to the Personal Articles Floater (PAF)?
-Jewelry, Furs, Cameras (This includes, pens, flasks, trophies, smoking equipment, items of personal adornment containing precious metals; genuine and imitation fur; and photography equipment, binoculars, telescopes and microscopes) -Musical Instruments, Silver, Golf (musical instruments must be scheduled individually, but there is blanket coverage for accessories; there is blanket coverage for silver, silver-plate items, gold, gold-plate items; golf clubs, equipment and clothing can have blanket coverage). -Fine Arts (Individual items must be scheduled; however, blanket coverage is available for smaller items or collections. Agreed value coverage. No coverage for property on exhibit away from insured premises. Eligile items are: paintings, etchings, pictures, tapestries, stained glass, rugs, statues, marbles, bronzes, antiques, rare books or manuscripts and porcelains or rare glass) -Stamps & Coin Collection (Postage stamps, rare & current coins, paper money and bank notes; coverage can be blanket or scheduled; $1,000 for any unscheduled coin collection, $250 for any individual item).
What are the insured's duties with a jewelers block policy?
-Maintain safeguards in place at policy inception. -Take a yearly inventory -Keep records for 3 years of: Purchases, inventory, sales, property off premises and property of others on premises.
What are the characteristics of a Personal Articles Floater (PAF)?
-Open-peril coverage that is worldwide with no deductible. This coverage is subject to the "pair and set" provision. The valuation is determined using the least of the following (unless there is agreed value coverage): -ACV -Cost to repair or replace -Coverage limits
How is loss settlement determined for jewelers block policies?
-Value is determined at the time of loss. Historical or antique value have no bearing on valuation. The policy will pay the least of: -ACV -Cost to restore damaged property to pre-loss condition -Cost to replace damaged property -Lowest dollar value listed on the company's books
What are the four eligiible risks covered by inland marine policies?
1.) Domestic shipments 2.) Instrumentalities of transportation or communication 3.) Personal property floater risks 4.) Commercial property floater risks
What are the categories of inland marine?
1.) Domestic shipments (Transportation forms, uncontrolled annual transit form with your choice of open-peril or named-peril coverage; uncontrolled (single) trip transit form; uncontrolled motor truck cargo form with FOB shipping point and FOB destination point liability; and controlled mail coverage form with open peril coverage)
What types of property are eligible for coverage under an inland marine policy?
1.) Movable property 2.) Property in transit 3.) Instrumentalities of transportation or communication, including: roads, bridges, tunnels, radio towers, & power lines
What is a Personal Articles Floater (PAF)?
A separate form for specific property coverage. The coverage is usually for several types of property. The PAF specifies coverage and premium for each property type.
What is a controlled line floater?
A standard provision form filed with the DOI for uniform use. It discloses the rates being charged and is used for general property floaters (e.g., personal effects and personal property. It is also used for specific property (e.g., cameras, fine arts, golf equipment, jewelry and furs, musical instruments, stamp and coin collections, and silverware).
Noreen is a professional photographer, and she has a personal articles floater that covers her best camera for up to $6,000. While she is working a wedding, the camera gets knocked into a pool and is ruined. Before the accident, her camera was worth $5,000, but a new, comparable one would cost her $7,000. How much will Noreen's PAF pay her for this loss? A. $5,000 B. $6,000 C. $0 D. $7,000
A. $5,000 (A Personal Articles Floater pays the lesser of: ACV, replacement/repair cost, or the limit or coverage)
OBC Inc. is an online retail business that ships several thousand packages nationwide every year. Which type of inland marine policy would OBC Inc. likely use to protect their shipments until they reach their customers? A. Annual transit policy B. Block policy C. Trip transit policy D. Motor truck cargo policy
A. Annual transit policy (This policy will cover all of the insured's shipments during the year)
Micah owns an antique grand piano that is worth $38,000, and he is planning to ship the instrument to a famous auction house, in the hopes of selling it for top dollar. If Micah wants to insure the piano against any damage during this shipment, which policy would best meet his needs? A. Trip transit policy B. Annual transit policy C. Motor truck cargo policy D. Instrumentalities of transportation and communication policy
A. Trip transit policy (this will cover the items in a single shipment from the trip origination point to its destination)
What types of property are NOT eligible for coverage under an inland marine policy?
Actual means of transport, such as: trucks, airplanes, ships, forklifts, and cranes
Which of the following statements about inland marine insurance is FALSE? A. Inland marine insurance can provide coverage for television towers B. Inland marine insurance only covers goods that travel over inland waters C. An inland marine insurance policy can cover goods shipped by plane D. Inland marine insurance policies are often called "floaters"
B. Inland marine insurance only covers goods that travel over inland waters
Which of the following is TRUE regarding loss settlement in a jewelers block? A. Historical or antique value is factored into the value of damaged property at the time of the loss B. It will pay the least of ACV, the cost to restore, the cost to replace, or the lowest amount listed on the company's books C. It pays on an agreed value basis D. Value of insured property is agreed upon at the policy inception and cannot change until the next policy period
B. It will pay the least of ACV, the cost to restore, the cost to replace, or the lowest amount listed on the company's books
Which of these statements about the jewelers bock is FALSE? A. Coverage for theft of money form the insured's vault is an optional coverage that may be added to the policy B. Merchandise that is still in the jeweler's custody is not covered if it has already been sold C. Property of others in the insured's custody is covered, regardless of whether it is in the jewelry trade D. It is meant for jewelers with up to $250,000 in stock
B. Merchandise that is still in the jeweler's custody is not covered if it has already been sold
What are instrumentalities of transportation & communication for inland marine?
Bridges, tunnels, roads, dams, piers and dock, pipelines, power transmission lines, and antennas / towers for radio / TV. This forms of transport and communication are written on an uncontrolled form. The coverage pays for direct damage or loss of revenue due to a covered loss.
Melanie owns a set of 3 antique crystal vases that is worth $2,800, but during her most recent move, one of the vases was broken beyond repair. Melanie and her insurer have been unable to find a replacement vase to complete the set and bring it back to its original value. Without the broken vase, the remainder of the set is only worth $1,000. What should Melanie receive from the insurer under the pair and set provision of her personal articles floater? A. $933 B. $0 C. $1,800 D. $2,800
C. $1,800 (Under the "pair and set" provision, if a damaged item is part of a set and the insurer cannot restore the set to its original value, the insurer will pay the difference between ACV of the entire set before and after the loss. Before the loss, the set was worth $2,800; after the loss, it is worth $1,000. $2,800 minus $1,000 equals $1,800.
Which of the following statements about a personal articles floater (PAF) policy is FALSE? A. A PAF offers worldwide coverage B. A PAF is used to provide personal property floaters in a single policy form C. A PAF always pays actual cash value for damaged property D. A PAF provides coverage on an open-peril basis
C. A PAF always pays actual cash value for damaged property
Which of the following would NOT be considered an instrumentality of transportation and communication? A. A dock B. A bridge C. A truck D. A road
C. A truck (Instrumentalities of Transportation and Communication include things that are involved in, or assist in, the transportation of goods, such as docks, bridges, tunnels, roads, dams, radio towers and power lines. However, this does NOT include the actual vehicles doing the transporting, since these have their own policies.)
Coast-to- Coast Trucking is in the business of transporting fresh produce from farmers to markets all across the U.S. Which type of inland marine policy would best protect Coast-to-Coast Trucking's interest in the produce that it ships? A. Trip transit policy B. Instrumentalities of transportation and communication policy C. Motor truck cargo policy D. Mail coverage policy
C. Motor truck cargo policy (this policy will protect the carrier of the shipped goods, Coast-to-Coast Trucking, while the shipment is in transit)
The valuable papers and records floater can cover losses to all of the following, EXCEPT: A. Deeds B. Books C. Securities D. Maps
C. Securities
Which of the following businesses would NOT need bailee coverage? A. A jewelry repair shop B. A dry cleaner C. A shoe repair shop D. A record store
D. A record store
This type of inland marine policy covers expensive construction machinery while being transported, on-site, or in storage A. Boiler and machinery policy B. Mechanical breakdown coverage C. Construction block policy D. Contractor's equipment floater
D. Contractor's equipment floater
XYZ Productions has just signed a contract to perform the show "Cats" in 45 cities over the next 200 days. XYZ Productions needs insurance to protect the stage props and costumes throughout the nationwide tour. What type of commercial property floater might XYZ Productions purchase to protect their equipment? A. Contractors equipment floater B. Bailee's customer floater C. Block policy D. Theatrical property floater
D. Theatrical property floater
What are the conditions of the commercial inland marine policy?
General conditions: -Concealment, misrepresentation, and fraud -Legal action against insurer -No benefit to bailee -Policy period Loss conditions: -Abandonment -Appraisal -Duties of the insured -Insurance under 2 or more coverages -Property of Others -Recovery or salvage -Rights of recovery -Reinstatement of limit
What is an uncontrolled line floater?
Insurers use their own forms (which can vary by company and individual risk). It is used to meet the needs of individual clients and is not filed with the state DOI. Common floaters include: outboard motor boat floaters, gun floaters, sporting equipment floaters and wedding present floaters.
What are exclusions to the jewelers block policy?
Property on exhibition in showcases, property at an exhibition promoted by a trade association or public authority, property sold on a payment plan after it leaves the premises, property worn by the insured or an employee (or a family member or either), and property in the mail, in express carriers, or motor carriers.
What does the jewelers block cover?
The insured's stock in trade, jewelry sold (but not yet delivered), similar property of others in the insured's care, and damage to the building housing merchandise when damage is caused by theft, attempted theft, and collapse. There is optional coverage for show windows and money (if stolen from a vault or safe on the insured premises)
To which types of policies are floaters usually added?
To homeowners policies as scheduled property endorsements, but they can be written as stand-alone inland marine policies
What are common exclusions of the Personal Articles Floater (PAF)?
War, nuclear hazards, wear & tear, insects & vermin, spoilage, and gradual deterioration
